House is only worth $35K. It needs $40k of work to make it worth $50K. It's falling in around her. I want to help. Can I buy her house for $25K, sink $45K into it for repairs, have her gift the $25 back to me and my wife and then spend $45 on the house with the option to live there as long a she can? She would have a much better house with lower utilities. We would have the assurance that we wouldn't loose our initial investment. I'm not trying to make money, but I don't want to lose much.
Let's review how the primary residence is considered by Medicaid. If a Medicaid applicant is applying for nursing home benefits the primary residence (homestead) is considered an exempt asset if there is "intent to return". Most states automatically assume intent to return and do not count the primary residence. Other states have somewhat different rules (time frames, etc.) but essentially the same holds true.
If the primary residence is going to be counted for whatever reason this is usually cured by either renting the property (NET income, if any, must go to the Medicaid recepient's cost of care) or buy listing it for sale (whether the intent is to actually sell or not). In both cases the property will not be counted for Medicaid eligibility purposes.
When the Medicaid recipient dies, the state may make claim via a process formally known as "estate recovery". Interestingly, most states will only consider probate assets recoverable. Therefore, anything that passes outside of probate will not be recovered.
If the home is properly titled, either in a revocable living trust (be sure your state grants homestead to such trust property), or more securely via an "Enhanced Life Estate" deed (aka "Lady Bird Deed"), it will by-pass probate and therefore estate recovery.
By understanding the above you can make the investment in your mom's home without fear of losing the property if/when she were to receive Medicaid benefits.
The proposal you were making will cause a host of problems in that uncompensated gifiting is not permitted while receiving, or in contemplation of applying, for Medicaid benefits. States have the authority to look back 5 years for such gifts and to bring back into the estate the value of uncompensated transfers for the purpose of determining Medicaid eligibility.
Alternatively, if you want to purchase the house from her she can then, in turn, purchase a "life estate" in the home from you. If she then lives in the home for at least two years and applies for Medicaid the value of the transfer will not be considered for eligibility purposes.
My Dad and brother replaced a lot of their bathroom fixtures, counters, etc. while my Mom was in rehab after her fall and she has been nothing but grateful.
I would suggest an elder care attorney. They are expensive but sounds like it would be worth it.
God Bless
When she arrived back home, my fiance and I were excited to see her reaction. She walked in, SHOCKED, and said, "It's beautiful." It was quite a nice day.
Shortly after, I heard from different people that she had expressed to them that we fixed up her house so WE could live there and make her move out. She started destroying everything we had done, burning every piece of furniture with her cigarettes, the carpeting, the NEWLY DONE HARDWOOD, took the curtains down, well, you get the idea. It was an COMPLETE waste of time and money.
If I were you, I would fix what needs to be fixed and then sell it for what it is worth down the road when the inevitable "move" comes. That money will help out when she needs it later.